IDENTIFYING MARKET

SEGMENTS AND SELECTING

TARGET MARKETS
CHAPTER 9
IMPORTANT TOPICS OF THIS CHAPTER
• Elements of market segmentations
• Different levels of market segmentation
• Segmentation procedure
• Segmentation in consumer market
• Segmentation in business market
• Requirements for effective segmentation
• Market targetting

Adiba Anis, Assistant Professor, School of Business, Bangladesh Open University 2

Adiba Anis, Assistant Professor, School of Business, Bangladesh Open University 3
MARKET SEGMENTATION

Market Market
Market
Segmenta Positionin
tion
Targeting g

• Identify segment Evaluate Positioning

• Develop profiles Select Communicate

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FORD’S MODEL T FOLLOWED A MASS MARKET APPROACH

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FOUR LEVELS OF MICROMARKETING

Segments Niches

Local areas Individuals

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WHAT IS A MARKET SEGMENT?
A market segment consists of a group of customers who
share a similar set of needs ad wants.

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FLEXIBLE MARKETING OFFERINGS

• Naked
Discretionary
solution:
options:
ProductSome
and service
segmentelements
membersthat
value
all segment
options but
members
not
value
all

Adiba Anis, Assistant Professor, School of Business, Bangladesh Open University 8

PREFERENCE SEGMENTS
• Homogeneous preferences exist when consumers want the same things
• Diffused preferences exist when consumers want very different things
• Clustered preferences reveal natural segments from groups with shared
preferences

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 NICHE MARKETERS

Enterprise Rent-A-Car
targets the insurance-
replacement market

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BASKIN ROBBINS FOCUSES ON LOCAL MARKETING

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THE LONG TAIL
• Chris Anderson explains the long tail equation:
• The lower the cost of distribution, the more you can economically offer
without having to predict demand;
• The more you can offer, the greater the chance that you will be able to tap
latent demand for minority tastes; and
• Aggregate enough minority taste, and you may find a new market.

Adiba Anis, Assistant Professor, School of Business, Bangladesh Open University 12

 WHAT IS CUSTOMERIZATION?
Customerization combines operationally
driven mass customization with customized
marketing in a way that empowers consumers
to design the product and service offering of
their choice.

Adiba Anis, Assistant Professor, School of Business, Bangladesh Open University

SEGMENTING CONSUMER MARKETS

Geographic

Demographic

Psychographic

Behavioral

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 CLARITAS’ PRIZM
• Education and affluence
• Family life cycle
• Urbanization
• Race and ethnicity
• Mobility

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DEMOGRAPHIC SEGMENTATION

Age and Life Cycle

Life Stage
Gender
Income
Generation
Social Class

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 TOYOTA SCION - TARGETS GEN Y CONSUMERS

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DOVE TARGETS WOMEN

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THE VALS SEGMENTATION SYSTEM

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BEHAVIORAL SEGMENTATION
DECISION ROLES BEHAVIORAL VARIABLES

• Initiator • Occasions

• Influencer • Benefits

• Decider • User Status

• Buyer • Usage Rate

• User • Buyer-Readiness
• Loyalty Status
• Attitude

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THE BRAND FUNNEL ILLUSTRATES VARIATIONS IN THE
BUYER-READINESS STAGE

• Aware
• Ever tried
• Recent trial
• Occasional user
• Regular user
• Most often used

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LOYALTY STATUS

Hard-core
Split loyals
Shifting loyals
Switchers
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BEHAVIORAL SEGMENTATION BREAKDOWN

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THE CONVERSION MODEL

Convertible Shallow Average Entrenched

Users Nonusers

Strongly Weakly
Ambivalent Available
unavailable unavailable

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SEGMENTING FOR BUSINESS MARKETS

Demographic

Operating Variable

Purchasing Approaches

Situational Factors
Personal
Characteristics
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STEPS IN SEGMENTATION PROCESS

Needs-based segmentation
Segment identification Marketing-Mix
Segment attractiveness Strategy

Segment profitability
Segment positioning
Segment acid test
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EFFECTIVE SEGMENTATION CRITERIA

Measurable

Substantial

Accessible

Differentiable

Actionable

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PATTERNS OF TARGET MARKET SELECTION

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PATTERNS OF TARGET MARKET SELECTION

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PATTERNS OF TARGET MARKET SELECTION

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CREST WHITESTRIPS FOLLOWS A MULTISEGMENT STRATEGY

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SEGMENT-BY-SEGMENT INVASION PLAN

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PEPSI USED MEGAMARKETING IN INDIA

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MARKETING DEBATE

 Is mass marketing dead?

Take a position:
1. Mass marketing is dead.
or
2. Mass marketing is still a viable way to build
a profitable brand.

Adiba Anis, Assistant Professor, School of Business, Bangladesh Open University 34

MARKETING DISCUSSION

 Think of various product categories.

 How would you classify yourself
in terms of the various segmentation
schemes?
 How would marketing be more or less
effective for you depending upon the
segment involved?

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Adiba Anis, Assistant Professor, School of Business, Bangladesh Open University 36